Are you a veteran looking to afford your dream home? VA loans for veterans allow you to receive the benefits of VA home loans for both conventional and jumbo loan amounts.
Wondering how you can make the most of your VA home loan benefits? Here’s everything you need to know about using a VA jumbo loan and VA jumbo loan requirements.
What is a VA Jumbo Loan?
A VA jumbo loan is a home loan for a larger amount than a conventional loan. They can help you to purchase a home if you live in a more expensive area. These loans will often have different requirements to qualify.
Do You Qualify For a VA Jumbo Loan?
The VA has the same requirements to qualify for a government-backed VA jumbo loan as regular VA loans. Although the government qualifications are the same, private lenders may have different requirements for a larger loan amount.
VA Jumbo Loan Requirements
Because lenders assume a higher amount of risk for higher loan amounts, they often have stricter requirements for VA jumbo loans.
Jumbo Credit Score Requirements
Jumbo loans will ask for a higher credit score than conventional loans. While conventional VA home loans tend to have a minimum credit score of 600, VA jumbo loans often require credit scores above 680.
Depending on your other financial indicators, you may still qualify for a loan if you fall beneath these thresholds. The exact credit score requirements for a loan will depend on the lender. Regardless, the higher your credit score the better chances you will have of receiving a VA jumbo loan.
Jumbo Debt-to-Income Ratio
Debt-to-income ratios are the percentage of your monthly expenses that go towards paying your debts. The lower your DTI, the better chance you have to qualify for a jumbo loan. Usually, VA lenders prefer your debt to be less than 43% of your gross monthly income.
Lenders don’t typically have a set-in-stone maximum debt-to-income ratio amount. Rather, your DTI is considered in tandem with the rest of your loan application.
Disposable Income
Another method lenders use to calculate what monthly mortgage payment you can afford is by computing your disposable income. Similar to your DTI, your disposable income measures how much income you have left over each month after paying your debts.
The disposable income your lenders require depends on the loan amount you are asking for and the area you live in. Areas with a higher cost of living typically have higher requirements for disposable income.
The more disposable income you have, the easier it will be for you to make your loan payments. It is beneficial to both you and your lender that you are capable of paying your mortgage comfortably.
Income and Employment
As part of your jumbo loan application, your lender will ask for proof of employment and income. Lenders are looking to see if you have a stable job and therefore a stable income. They need confirmation that you will continue to make your monthly payments throughout the term of the loan.
Applicants who tend to change jobs frequently may find it more difficult to be approved for a jumbo loan. Your lender will check that you have a consistent flow of income before offering a home loan.
Cash Reserves
Some lenders will ask that you have enough cash reserves to pay 6 months of your mortgage payment. While this is not usually a requirement for conventional loans, it is a frequent request for VA jumbo loans.
VA Jumbo Loan Limits
The loan limits for a jumbo loan will depend on the private loan lender you apply with. Each lender has its own jumbo loan limits.
To be considered a jumbo loan, the loan amount must be higher than the maximum amount for a conventional loan. This threshold will vary depending on your location. For areas that have a higher cost of living, the minimum amount to be considered a jumbo loan may be higher.
The upper limit of a jumbo loan is up to the discretion of the lender. Not all lenders have an upper limit to the amount they are willing to offer. Instead, lenders will evaluate how much they are willing to offer applicants on a case-by-case basis. Lenders will offer loans for as much as they believe you will be capable of paying back.
Does This Mean I Can Get Any Size Loan I Want?
The Department of Veterans Affairs does not have a limit on the loan amount they will support. As long as you meet the qualifications to receive a VA loan, eligible veterans can use this benefit for any loan amount. The VA will offer the same percentage to back your loan regardless of the loan size.
However, the VA does not have the authority to grant you a loan. To receive a loan, you’ll need to meet the requirements of the private lender. However, lenders will often have lower requirements for VA-backed loans.
How to Qualify for a VA Jumbo Loan
For both conventional VA loans and VA jumbo loans, you will need to meet the Department of Veteran’s Affairs qualifications. In order to receive a VA loan, you must be one of the following:
- A veteran
- An active duty service member
- A member or discharged member of the National Guard and Reserve
- A surviving spouse
Learn More About the VA Jumbo Loan Requirements
If you have questions about how to acquire a VA jumbo loan, give us a call. We’re here to address any of your questions and help you get the home of your dreams. You can talk to a representative by calling 602-908-5849.
